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Wednesday, Nov 23, 2005


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Markets - Preferential Allotments
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ICICI Venture to buy 26% stake in Viceroy Hotels thru pref offer

C.R. Sukumar

Hyderabad , Nov. 22

ICICI Venture Funds is picking up 1.14 crore equity shares and share warrants of Viceroy Hotels Ltd, amounting to 26 per cent of the equity, through the preferential allotment route. The stake being picked up by ICICI Venture includes 60 lakh equity shares and 54 lakh share warrants convertible into equity shares.

Viceroy Hotels is making a preferential allotment to Mr Rakesh Jhunjhunwala and associates and to the promoter group as well.

The issue is aimed at part-financing the company's proposed expansion plans that include setting up a five-star deluxe hotel in Chennai and another five-star hotel at Bangalore.

"The star hotel in Chennai is coming up near Adyar at an estimated cost of Rs 460 crore. The project, which involves 350 rooms and 200 executive apartments, will be completed over the next three years. The Bangalore hotel, coming up on Racecourse Road at an investment of Rs 160 crore, will have 200 rooms and will take off in two-and-a-half years," the Viceroy Finance Director, Mr K. Narasimha Rao, told Business Line.

At a meeting on Monday, the Viceroy board decided to issue 81.71-lakh equity shares and 78.28-lakh share warrants of Rs 10 each at a premium of Rs 77.50 a share and share warrant, aggregating to around Rs 140 crore.

Mr Rakesh Jhunjhunwala, who currently holds close to 30 lakh shares in Viceroy Hotels, would subscribe to another 10 lakh shares and 10 lakh warrants, taking his total holding in the company to 50 lakh shares, constituting close to 14 per cent stake.

The Viceroy promoters are also subscribing to 10 lakh shares and 12.5 lakh share warrants. Following the merger of group-owned restaurants into the company, the promoters would get another 40-lakh shares. "This enables the promoters to retain their equity holding in the company at around 34 per cent on the post-issue paid-up capital," Mr Rao said.

According to Mr Rao, the Viceroy board also approved the proposal received from the US-based restaurants major JW Marriott to take the proposed Chennai hotel property on management contract. Further, the board also authorised the Managing Director to explore the possibility of having franchisee agreement/management contract with Marriott International for the Bangalore hotel as well, he said.

The board decided to convene the annual general meeting on December 20 to seek the consent of its shareholders for the proposed preferential offer. According to Mr Rao, the allotment process would be completed before December-end.

The Viceroy stock closed at Rs 97.85 on Bombay Stock Exchange on Tuesday, gaining 4.99 per cent over the previous close, with close to 56,000 shares changing hands.

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